Over 100 Retailers and Producers Take On GOP’s Proposed Border Adjusted Tax

More than 100 retailers, associations and brands joined forces Wednesday to push back against President Donald Trump’s proposed Border Adjustment Tax (BAT).

Americans for Affordable Products (AAP) has the backing among food and beverage giants like Walmart, Target, BJ’s Wholesale, QVC, Brea Bakery, the National Grocers Association, the American Beverage Licensees and the National Retail Federation. It’s a coalition created “against higher prices on everyday necessities,” and is taking immediate aim at the proposed 20 percent levy on imported goods.

According to the AAP’s website, “We oppose any (BAT) because it will increase the cost of clothing, food, medicine, gas, and other essential items that Americans rely on. Consumers shouldn’t bear the burden of this new tax while some corporations get a tax break.”

The organization also notes that its members “support comprehensive tax reform and encourage Congress to implement policies that helps businesses of all sizes, ensures the protection and creation of jobs, and promotes prosperity for all Americans.”

The BAT would implement higher taxes on imports to encourage more production in the U.S. Goods that are exported are exempt. The tax would, in part, be used to finance President Trump’s proposed wall along the Mexican border. It’s expected to be part of House tax reform legislation that will likely be announced in March or April.

While some argue that the tax encourages business and capital to stay in the U.S., the AAP thinks this tax will be problematic for businesses, as well as consumers, including within the food industry, according to Brian Dodge, senior executive vice president of public affairs at the Retail Industry Leaders Association.

One key issue: items like sugar, coffee, mangos, avocados, bananas and rice, are produced in foreign countries. Quartz reports that food imports from Mexico alone in 2015 totaled $21 billion. The prospect of having to either absorb tariff-related price increases, or pass price increases along to consumers, has retailers like Target concerned.

“At Target, we are closely monitoring the ongoing discussions on tax reform and the impact of the House’s proposed border adjustability tax on our guests,” Target spokesperson Dustee Jenkins told NOSH in an email.

The AAP estimates that if passed, the BAT will cost American households up to $1,700 a year in taxes on imported products. For grocers specifically, the National Grocers Association estimates that as much as 30 to 40 percent of fresh produce items sold in stores are imported into the United States at some point throughout the year.

“From fresh produce to ground coffee, independent supermarkets carry a wide variety of food items that simply are not grown in the United States and must be imported either year round or seasonally,” Greg Ferrara, a spokesperson for the National Grocers Association, told NOSH. “Instituting a ‘food tax’ on consumers for imported products is simply not a workable solution.”

Dodge told NOSH that although many retailers support the coalition and its goals, members of the association will not be required to remove products or brands that don’t align with the AAP’s mission.

“Our objective is to stop this tax proposal from passing in the House,” Dodge told NOSH. “[Retailers] are speaking for themselves, not brands.”

The AAP is also arguing that the BAT will negatively impact the U.S. job market. According to data provided by the group, the tax would force many businesses to close since their tax bills would far exceed the costs American consumers can pay, leaving the 1 in 4 Americans that are employed by these companies without a paycheck.

Retailers aren’t the only ones raising questions about the BAT. U.S. Senate Finance Committee Chairman Orrin Hatch addressed the U.S. Chamber of Commerce on Wednesday and questioned whether the proposed tax would unduly burden U.S. consumers and businesses, Reuters reported.

“We don’t have definitive answers to any of those questions at this particular point. And without them, I don’t think I can give definitive positions,” Hatch said.

U.S. investors are also concerned with the tax implication. Some believe that if it passes, the dollar could rise against other currencies by about the same 20 percent increase, meaning that those who have sent capital overseas to invest in ingredients or brands not based in the U.S. could see up to 15-20 percent losses.

Though the coalition is only a day old, Dodge said the response has been positive and more than 130 retailers have already registered online. He added that the coalition is not a resistance movement against President Trump, but against the tax itself.

“President Trump has referred to having a ‘buffet of options’ for this tax, so he has not endorsed it,” Dodge said. “We have always been strong supporters of tax reform and will be constructive in any conversation about reducing rates…. But we think this tax reform is fundamentally untested and harmful to U.S. consumers.”

Here is a complete list of retailers, food and beverage brands, and associations currently members of the AAP: